Question 1. A coal mine operates with a production function Q = L/2, where L is the quantity of labor it employs, and Q is total output. The firm is a price taker in the output market, where the price is currently 32. The firm is a monopsonist in the labor market, where the supply curve for labor is w = 4L. a) What is the monopsonist's marginal expenditure function, MEL? (5pts) b) Calculate the monopsonist's optimal quantity of labor. What wage rate must the monopsonist pay to attract this quantity of labor? (10 pts) c) What is the deadweight loss due to monopsony in this market? (10 pts) Question 2. Ann and Bob each consumes apples (x) and bananas (y). There are 5 apples and 10 bananas in total in this economy. Ann's utility function is u(x, y) = x + y and Bob's utility function is u (x, y) = xy. Ann initially has 2 apples and 6 bananas, and Bob initially has 3 apples and 4 bananas. Both x and y can be a non-integer. a) Verify whether the initial allocation is exchange efficient or not. If not, provide an allocation that proves that the initial allocation is not efficient. (5 pts) b) Verify whether an allocation { Ann:(5, 6), Bob:(0, 4)} is exchange efficient or not. If not, provide an allocation that proves that this allocation is not efficient. (6 pts) c) Derive the contract curve and draw it on the Edgeworth box. (14 pts)